How to save LTCG Tax on sale of property
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 October 2010
Sir,
On Nov.2009,I along with my son(only issue) have jointy purchased a flat with cost approx. Rs. 16,00,000/-.But entire amount was paid by me from my own source of income.My son had earlier purchased a flat on Jan.2002 & the same was sold on Sept.2010 & earned Long Term Capital Gain of approx. Rs. 8,00,000/- on sale of that flat.
I want to know if my son payback to me Rs. 8,00,000/- as 50% payment as investment as co-ownership of the flat purchased on Nov.2009 at a cost approx. Rs. 16,00,000/- (The flat purchasd jointly within one year before sale of other flat),can he save Tax on Long Term Capital Gain of approx. Rs. 8,00,000/-
What are official documents required in thease transactions?
On Nov.2009,I along with my son(only issue) have jointy purchased a flat with cost approx. Rs. 16,00,000/-.But entire amount was paid by me from my own source of income.My son had earlier purchased a flat on Jan.2002 & the same was sold on Sept.2010 & earned Long Term Capital Gain of approx. Rs. 8,00,000/- on sale of that flat.
I want to know if my son payback to me Rs. 8,00,000/- as 50% payment as investment as co-ownership of the flat purchased on Nov.2009 at a cost approx. Rs. 16,00,000/- (The flat purchasd jointly within one year before sale of other flat),can he save Tax on Long Term Capital Gain of approx. Rs. 8,00,000/-
What are official documents required in thease transactions?
23 October 2010
Yes.. tax on LTCG can be saved as the new property is purchased within one year prior to the sale of old.
still wait for more opinions....
still wait for more opinions....
Message likes :
1 times
28 July 2024
To save on Long-Term Capital Gains (LTCG) tax, especially when selling a property, leveraging the exemptions available under the Income Tax Act is crucial. Based on your scenario, here's how your son could potentially save on LTCG tax:
### **Understanding the Scenario**
1. **Previous Property Sale**:
- **Date of Sale**: September 2010
- **LTCG Amount**: ₹8,00,000
- **Previous Property**: Purchased in January 2002 and sold in September 2010.
2. **New Property Purchase**:
- **Date of Purchase**: November 2009
- **Cost**: ₹16,00,000
- **Joint Ownership**: You and your son.
### **1. **Understanding Capital Gains Exemption**
**Section 54**:
- **Eligibility**: This section allows exemption of LTCG from the sale of a residential property if the gains are invested in another residential property.
- **Time Frame**: The new residential property should be purchased within one year before or two years after the date of sale of the old property, or it should be constructed within three years.
**Section 54F**:
- **Eligibility**: This section provides exemption if the capital gains are invested in a residential property, regardless of whether the new property is residential or not.
- **Conditions**: You must not own more than one residential property on the date of transfer of the old property, excluding the new residential property.
### **2. **Investing in New Property**
Since you and your son jointly purchased the new property in November 2009, here's how he might use this to save on the LTCG tax:
- **Co-Ownership**: For your son to claim the exemption, he needs to show that his share of the investment in the new property matches the capital gains.
- **Contribution**: If your son contributes ₹8,00,000 to the purchase of the new flat, he could potentially use this as an investment for claiming the exemption.
### **3. **Required Documents for Claiming Exemption**
1. **Proof of Investment**:
- **Bank Statements**: Showing the transfer of ₹8,00,000 from your son to you.
- **Payment Receipts**: From the builder or seller indicating the payment made for the new property.
2. **Sale Deed of the New Property**:
- **Joint Ownership**: A copy of the sale deed showing joint ownership of the new property.
3. **Capital Gains Computation**:
- **Details of the Sale**: Computation of LTCG from the sale of the old property.
- **Investment Proof**: Evidence showing the investment in the new property.
4. **Income Tax Return (ITR)**:
- **Return Filing**: Ensure the exemption is claimed in the appropriate section of the ITR for the relevant financial year.
5. **Supporting Documents**:
- **Legal Agreements**: If any legal agreements or letters were executed for the transfer of money or co-ownership details.
### **4. **Tax Filing and Documentation**
- **Claiming Exemption**: When filing the Income Tax Return, ensure to claim the exemption under the appropriate section (54 or 54F). Provide all necessary details and attach supporting documents as required.
- **Consult a Tax Professional**: Given the complexities involved, consulting with a tax advisor or professional can help ensure proper compliance with tax laws and maximization of exemptions.
### **Summary**
Your son can potentially save on LTCG tax if he invests the ₹8,00,000 into the new residential property purchased jointly with you. To claim the exemption:
- Ensure that the investment matches the amount of LTCG.
- Maintain all relevant documents such as payment receipts, sale deed, and bank statements.
- File the exemption claim properly in the Income Tax Return.
### **Official Documents Required**
1. **Payment Proof**: Bank transfers or payment receipts.
2. **Sale Deed**: For the new property showing joint ownership.
3. **ITR Details**: Including calculations and claims for exemption.
4. **Capital Gains Computation**: Document showing computation of gains and investments.
Consult a tax advisor for precise guidance tailored to your situation.
### **Understanding the Scenario**
1. **Previous Property Sale**:
- **Date of Sale**: September 2010
- **LTCG Amount**: ₹8,00,000
- **Previous Property**: Purchased in January 2002 and sold in September 2010.
2. **New Property Purchase**:
- **Date of Purchase**: November 2009
- **Cost**: ₹16,00,000
- **Joint Ownership**: You and your son.
### **1. **Understanding Capital Gains Exemption**
**Section 54**:
- **Eligibility**: This section allows exemption of LTCG from the sale of a residential property if the gains are invested in another residential property.
- **Time Frame**: The new residential property should be purchased within one year before or two years after the date of sale of the old property, or it should be constructed within three years.
**Section 54F**:
- **Eligibility**: This section provides exemption if the capital gains are invested in a residential property, regardless of whether the new property is residential or not.
- **Conditions**: You must not own more than one residential property on the date of transfer of the old property, excluding the new residential property.
### **2. **Investing in New Property**
Since you and your son jointly purchased the new property in November 2009, here's how he might use this to save on the LTCG tax:
- **Co-Ownership**: For your son to claim the exemption, he needs to show that his share of the investment in the new property matches the capital gains.
- **Contribution**: If your son contributes ₹8,00,000 to the purchase of the new flat, he could potentially use this as an investment for claiming the exemption.
### **3. **Required Documents for Claiming Exemption**
1. **Proof of Investment**:
- **Bank Statements**: Showing the transfer of ₹8,00,000 from your son to you.
- **Payment Receipts**: From the builder or seller indicating the payment made for the new property.
2. **Sale Deed of the New Property**:
- **Joint Ownership**: A copy of the sale deed showing joint ownership of the new property.
3. **Capital Gains Computation**:
- **Details of the Sale**: Computation of LTCG from the sale of the old property.
- **Investment Proof**: Evidence showing the investment in the new property.
4. **Income Tax Return (ITR)**:
- **Return Filing**: Ensure the exemption is claimed in the appropriate section of the ITR for the relevant financial year.
5. **Supporting Documents**:
- **Legal Agreements**: If any legal agreements or letters were executed for the transfer of money or co-ownership details.
### **4. **Tax Filing and Documentation**
- **Claiming Exemption**: When filing the Income Tax Return, ensure to claim the exemption under the appropriate section (54 or 54F). Provide all necessary details and attach supporting documents as required.
- **Consult a Tax Professional**: Given the complexities involved, consulting with a tax advisor or professional can help ensure proper compliance with tax laws and maximization of exemptions.
### **Summary**
Your son can potentially save on LTCG tax if he invests the ₹8,00,000 into the new residential property purchased jointly with you. To claim the exemption:
- Ensure that the investment matches the amount of LTCG.
- Maintain all relevant documents such as payment receipts, sale deed, and bank statements.
- File the exemption claim properly in the Income Tax Return.
### **Official Documents Required**
1. **Payment Proof**: Bank transfers or payment receipts.
2. **Sale Deed**: For the new property showing joint ownership.
3. **ITR Details**: Including calculations and claims for exemption.
4. **Capital Gains Computation**: Document showing computation of gains and investments.
Consult a tax advisor for precise guidance tailored to your situation.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- Tds on building rent monthly
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
- Strategical investment in Public listed company
Trending Online Classes
CAclubindia
